New health department among Carolinas HealthCare System plans for county

By Staff reports

Published: Thursday, March 7, 2013 at 09:52 AM.

Updated 3:50 p.m.

The operators of Charlotte-based Carolinas HealthCare System will pay Cleveland County more than $100 million to take over the property and operations of the Cleveland County HealthCare System.

During a special meeting Thursday, county commissioners approved an agreement that will convey all liabilities and obligations of Cleveland Regional Medical Center in Shelby, Kings Mountain Hospital, Cleveland Pines Nursing Center and all other Cleveland County HealthCare facilities in the county to the Charlotte-Mecklenburg Hospital Authority, which operates Carolinas HealthCare System.

The county now owns the property deeds for those health care facility locations and will give those deeds to the hospital authority.

"Cleveland County has already benefitted from the technology and best practices of Carolinas HealthCare System," said Brian Gwyn, president and chief executive officer of Cleveland County HealthCare System. "This is a final movement to move the future of health care forward in this county. And when areas are looking to bring in new industry, health care brings in phenomenal growth."

The county's health department building and real estate are also included in the agreement, but the county will continue to operate those facilities.

The operators of Charlotte-based Carolinas HealthCare System will pay Cleveland County more than $100 million to take over the property and operations of the Cleveland County HealthCare System.

During a special meeting Thursday, county commissioners approved an agreement that will convey all liabilities and obligations of Cleveland Regional Medical Center in Shelby, Kings Mountain Hospital, Cleveland Pines Nursing Center and all other Cleveland County HealthCare facilities in the county to the Charlotte-Mecklenburg Hospital Authority, which operates Carolinas HealthCare System.

The county now owns the property deeds for those health care facility locations and will give those deeds to the hospital authority.

"Cleveland County has already benefitted from the technology and best practices of Carolinas HealthCare System," said Brian Gwyn, president and chief executive officer of Cleveland County HealthCare System. "This is a final movement to move the future of health care forward in this county. And when areas are looking to bring in new industry, health care brings in phenomenal growth."

The county's health department building and real estate are also included in the agreement, but the county will continue to operate those facilities.

What are the finances of the deal?

When the deal is official, the Charlotte-Mecklenburg Hospital Authority will pay Cleveland County $23 million and provide a promisory note for $77 million paid in installments over the next 26 years, according to the agreement.

The $23 million will help fund a new planned health department and other facilities, with any remaining portion of those funds going into the county's fund balance, said County Manager Eddie Bailes.

Starting July 1, 2013, and each July 1 through 2037, the hospital authority will pay Cleveland County a $3 million installment that will go into the county's general funds for services and programs, Bailes said.

Sources say the $3 million annual payment will go into the county's general fund, capital fund and reserve fund, much like the current $1.4 million lease payment, which will be discontinued.

The hospital authority will make a final $2,275,000 payment to the county by July 1, 2038.

When is the deal expected to close?

As early as Monday afternoon, according to Bob Yelton, Cleveland County attorney.

What happens to the current hospital lease?

The county-hospital lease will be terminated when the new deal is final.

What is the opportunity for increased services for patients?

Gwyn said announcements are expected soon on increased specialty programs in Cleveland County -- including a Levine Children's Hospital presence, oncology services and more.

“Cleveland County will benefit from the best advanced technology that will help them move up in health care,” Gwyn said. “This transaction has no expiration date, which will allow advanced systems to advance further. And our hospitalists cover both Cleveland Regional and Carolina Medical, so our patients in Shelby and Charlotte are getting the same care.”

Patients will now benefit further from services of a larger health system, said Russ Guerin, executive vice president of development for Carolinas HealthCare System.

"Your chances for stronger care improve under an $8 billion health system," Guerin said. "The health system can make greater long-term investments for care."

Possible parallels are the recent additions to Carolinas HealthCare System include Carolinas Medical Center-NorthEast, based in Concord, and Carolinas Medical Center-Union, based in Monroe.

Upon joining the Carolinas HealthCare System, NorthEast expanded to create the Batte Cancer Center and Cannon Heart Center while Union has since opened the Jesse Helms Nursing Center, which houses 70 residents requiring long-term or short-term rehabilitation services.

Sources say Cleveland County would become a "western hub" for Carolinas HealthCare System.

What is the relationship between Carolinas HealthCare System and Cleveland County HealthCare System now and how will that change?

Cleveland County HealthCare System and Carolinas HealthCare System have partnered together for some services since the mid-1990s.

The new agreement between the health systems will mean Carolinas HealthCare System will assume complete responsibility of operating Cleveland County HealthCare System facilities and programs, and there are plans for Carolinas HealthCare System to increase services in Cleveland County.

"This moves assets and more fully integrates what we're already doing in Cleveland County," said Guerin . "We will connect Cleveland County more closely with our system. Now, programs are focused on bringing medical care to all communities -- large metros, small cities and rural areas. In Cleveland County, leaders are saying 'it's yours and we're all in.'"

Will this mean new jobs in the county?

“Potentially, as we grow our services here, we will bring in new positions,” Gwyn said.

How long has the new partnership agreement been in the works?

The Charlotte-Mecklenburg HealthCare Authority and Cleveland County have been in negotiations for about six months, Guerin said.

What will happen to the names of current Cleveland County health care facilities?

As Carolinas HealthCare System has increased its presence in health care facilities in other parts of the region, the Carolinas name has become part of the names of those facilities. Carolinas HealthCare and Cleveland County officials would not say Thursday what exact plans are for the names of local health care facilities that are part of the agreement.

What happens if the hospital authority or Carolinas HealthCare System changes?

If they vacate the Cleveland County health care properties included in the agreement, Cleveland County can acquire the property or acquire 50 percent of the proceeds of the sale of the property from a third party buyer, according to the agreement.

What's the plan for the health department, other facilities?

Sources also tell The Star that Carolinas HealthCare System plans to invest $80 million in its Cleveland County operations in the coming years. It is considered “likely,” the source said, that the current health department and mental health building will be torn down so that new facilities can be built – these facilities will address targeted community medical needs.

Possible parallels are the recent additions to Carolinas HealthCare System, which include Carolinas Medical Center-NorthEast, based in Concord, and Carolinas Medical Center-Union, based in Monroe.

Upon joining the Carolinas HealthCare System, NorthEast expanded to create the Batte Cancer Center and Cannon Heart Center while Union has since opened the Jesse Helms Nursing Center, which houses 70 residents requiring long-term or short-term rehabilitation services.

Cleveland County will lease from the Charlotte-Mecklenburg Hospital Authority the health department land for $1 a year for two years, Yelton said. There are plans for the county to build a new health department.

The county will face a "substantial rent payment" if still using the current health department facility after those two years are up, Yelton said.

Cost estimates for the new health department are not yet available, but similar construction in nearby counties as cost around $15 million.

Carolinas HealthCare System will pay Cleveland County $101 million in exchange for assuming all liabilities and obligations of Cleveland Regional Medical Center, Kings Mountain Hospital, Cleveland Pines Nursing Center and all other Cleveland County HealthCare facilities in the county.

County commissioners approved the agreement this morning.

The Cleveland County Health Department buildings and real estate are also included in the agreement. However, the county will continue to operate the facilities.

The agreement will allow for enhancement of healthcare facilities and services, according to Carolinas HealthCare System.

Check back later today for more updates on the agreement and how it will affect you.

What they’re saying:

What does this mean for Cleveland County and its residents?

“Cleveland County has benefitted from technology and best practices through a strong relationship with Carolinas HealthCare System for 20 years as part of this partnership. This transaction will solidify that forever. We’ll be able to advance services quicker with a big system behind us.”

-- Brian Gwyn, president and CEO of current Cleveland County HealthCare System

“Cleveland County residents benefit most. Now, you have the largest health care system in the southeast in your community. That strengthens care. That’s an economic driver, too.”

-- Russ Guerin, executive vice president of development and planning for Carolinas HealthCare System

“It’s been the goals of this board (of commissioners) to address jobs, health care, education, travel and tourism. I think this partnership today elevates health care in this county and in this region.”

-- Eddie Holbrook, Cleveland County commissioner

“I remember when (Carolinas HealthCare System) was Charlotte Hospital. I’ve seen the growth (the system) has had and we look forward to the opportunities it will bring to our community.”

-- Susan Allen, Cleveland County commissioner

“It’s a good partnership situation for Cleveland Regional and the county. It’s going to be a win-win situation for all of us and a benefit for all of us.”

-- Johnny Hutchins, Cleveland County commissioner

“The hospital has been a great corporate citizen that we see out in our community. As (Carolinas HealthCare System) gets out in the community, I think we’re better for it.”

-- Ronnie Hawkins, Cleveland County commissioners chairman

About Carolinas HealthCare System

* Organized in 1943

* Headquartered in Charlotte, with dozens of affiliated hospital, urgent care, physician's office, pharmacy and other facilities in the surrounding region

* Crawley Memorial Hospital – 50 beds, established in 1949 as Royster Memorial Hospital and hospital built in 1974

Source: Cleveland County HealthCare System

A look back at Cleveland County HealthCare System

Some of the key dates in the development of the health system:

1923 – 43-bed Shelby Hospital opened

1945 – Cleveland County took over management of Shelby Hospital

April 1, 1951 – First patient admitted to the 24-bed facility called the Kings Mountain unit of the Cleveland County Hospital

1956 – Wing added in Shelby to increase bed capacity to 175 and number of staff to 181

1957 – Shelby location renamed Cleveland Memorial Hospital

1960 – 25 additional beds added to the Kings Mountain location

1967 – 100-bed wing added in Shelby, bringing patient capacity to 275

1988 – Voters passed a $25 million bond referendum to help finance construction of a new Shelby hospital

1992 – new Shelby hospital building complete

1996 – Cleveland Memorial Hospital began doing business as Cleveland Regional Medical Center (CRMC), and the county commissioners approved a lease agreement between CRMC and Carolinas HealthCare System.

1997 – CRMC joined other community health care providers to form a partnership called the HealthCare Enterprise to assure clients a seamless and cost-efficient approach to healthcare